20000315

CBOT soya products end higher on US drought warning

CHICAGO: Chicago Board of Trade soyameal and soyaoil futures ended higher on Monday, lifted by a surge in soyabeans amid an official U.S. drought warning.

CBOT soyameal settled $4.70 to $5.80 per ton higher, with May up $5.00 at $171.30, its best close since touching $171.50 on Feb. 18.

Soyaoil was 0.22 to 0.34 cent per lb higher, with May up 0.27 at 16.47 cents.

Both products were lifted by strong gains in soyabeans amid forecasts by the U.S. government that the key Midwest growing region could be hit by a drought in the spring.

"The drought of 1999 remains with us in the new century," said U.S. Commerce Secretary William Daley.

"Our data indicates drought conditions are probably going to get worse before they get better," he said.

Agriculture Secretary Dan Glickman declined to predict the impact another drought could have on the already depressed farm economy. He said farmers must be prepared for the worst.

The U.S. Department of Agriculture has estimated that in 1999, drought caused some $1.35 billion in farm income losses.

The government has blamed the warm weather and lack of moisture on the La Nina phenomenon in the Pacific Ocean that limits rainfall and leads to warmer hemispheric temperatures.

"Both meal and oil were lifted by beans," said Dan Cekander, head of grain research at FIMAT Futures.

He said the soyabean market was also lifted by the prospects of wet weather slowing the harvest pace in Brazil, the world's second largest producer after the United States.

He said that harvest delays could lead to further Chinese purchases of soyabeans from the United States.

Weather Services Corp. meteorologist Joel Burgio said early on Monday that weekend rainfall in northern Brazil covered Mato Grosso, the country's second biggest soyabean state.

Brazilian meteorologist Somar said solid amounts of rain were forecast for the first few days of this week in Mato Grosso, where some 20 percent of the crop was harvested as of March 3. Commodity funds bought 3,300 soyameal contracts. E D&F Man International bought some 2,000 May contracts, RJ O'Brien bought 300 May, 300 January, Salomon Smith-Barney bought 800 May, ADM Investor Services sold 500 May.

In soyaoil, funds bought 1,600 contracts. Refco Inc. bought 500 May, FIMAT Futures bought 200 July, 100 May, ADM Investor Services bought 100 May, 200 July, 100 August, sold 700 May.

Soyameal futures volume was estimated by the CBOT at 35,000 lots compared to 34,778 traded on Friday.

Soyaoil volume was estimated at 18,000 contracts compared to 25,754 traded Friday. -Reuters